1 CONSENSUS BUILDING IN COMPLEX NETWORKS An analysis of the motives, processes and output within the Danish Mirror Committee Written by: Louise Trøllund Jensen M.Sc. (IBS) Supervised by: Esben Rahbek Pedersen CBS Center for Corporate Social Responsibility Master Thesis November 2008 Copenhagen Business School
2 EXECUTIVE SUMMARY ISO is the designation of the future International Standard giving guidance on Social Responsibility (SR). It is intended for use by organizations of all types, and therefore, different categories of organizations have participated in the development of the ISO standard on SR ISO This process has included various stakeholders from different countries, developing and developed, and it has been a challenging consensus building exercise. In this thesis a fragment of the international ISO development process the micro cosmos of the Danish Mirror Committee (DMC) is investigated. Within this national network the consensus building exercise is analyzed in order to evaluate how the motives, processes and output of the DMC has fostered consensus. Consensus building is a difficult task and there are several factors that influence to which degree consensus can be reached. The motives of the stakeholders in a network may differ, which makes it more challenging to reach consensus. Moreover, the processes that take place within a network are guided by the network structure, which is defined by the ties between actors and the relative position of these. This structure influences the level of consensus within the network. Furthermore, a certain level of critical success factors are required if consensus among members should be reached. If the processes are managed well, it becomes easier for the actors to reach consensus and find a joint solution. Another indicator for the level of consensus is the realization of expected output of being part of a network. Members may have different expectations, but their evaluation of the level of realized expectations indicate that a certain level of consensus has been reached if realization is possible. These different factors are important indicators when determining the success of the consensus building exercise that takes place among members in a network. This has led to an interest in how consensus is fostered within networks. Therefore, the consensus building exercise of the DMC network is the focal point of this investigation. Furthermore, it constitutes the problem field which is analyzed in this thesis. Thus, the motives, processes and output are analyzed to evaluate how these three components foster consensus in a network.
3 ACKNOWLEDGEMENTS The author of this thesis wishes to thank Maibritt Agger at Danish Standards for providing valuable insights on the ISO standard on Social Responsibility. She has helped the author to gain an overview of the development of the standard and has continuously kept the author updated on recent developments in the international process guided by the International Organization for Standardization as well as developments in the Danish Mirror Committee. Moreover, she has helped the author to gain access to the participants of the Danish Mirror Committee, which is essential for the preparation of the thesis. The author gratefully acknowledges the members of the Danish Mirror Committee for their willingness to participate in the case study of this thesis and their helpful comments and suggestions. The author also wishes to express her gratitude to Esben Rahbek Pedersen for theoretical inspiration in the beginning of the process, and for further inspiration and supervision throughout the writing period. Moreover, the author wishes to thank the two reviewers, Julie Trøllund Jensen and Sofie Norsker, for their insightful comments on earlier drafts of the thesis. Last, but not least, the author acknowledges Tommy Bindslev for his provision of a quiet and inspiring environment, without which the thesis may never have been written. Copenhagen, November 17, 2008: Louise Trøllund Jensen This thesis is set in Times New Roman (font size 12) and contains characters including spaces and tables, which is equal to 79,8 normal pages.
4 TABLE OF CONTENT 1 Introduction 1 2 Problem Identification 2 3 Structure 4 4 Methodology Methodological Positioning Operationalizing the Methodology Theoretical Methodology Stakeholder Theory Social Network Analysis Stakeholder Network Theory Rowley s Network Theory of Stakeholder Influences Network Theory of Stakeholder Influences as Methodology Network Management Network Management as Methodology Theoretical limitations Practical Methodology Research Approach Research Strategy Data Collection Sampling The Trinity of Generalizability, Reliability and Validity Limitations 18 5 Setting the Scene Why Private standards? Introduction to ISO
5 6 Analysis The Danish Mirror Committee Part I: The Motives Motives According to Stakeholder Group Industry NGOs Government Labor Consumer Service, Support, Research and Others (SSRO) Summary of Part I: The Motives Part II: The Network Structure and Processes Network Structure Density Centrality Network Processes The Number of Actors Diversity within Networks Closed Nature of Networks Conflict of Interests Costs of Network Management Political and Social Context Leadership and Commitment Power Skills Summary of Part II: The Network Structure and Processes Part III: The Output Summary of Part III: The Output 57
6 7 Discussion Why is there a lack of conflicts in the DMC network? Summary of Arguments in the Discussion 63 8 Conclusion 64 9 Implications Future Research Avenues Bibliography Appendices 72 LIST OF FIGURES Figure 2.1 Parameters of Consensus 3 Figure 4.1 Methodological Position 6 Figure 4.2 The Structure of the Analysis 7 Figure 5.1 Project Plan for development of ISO on SR 21 Figure 6.1 Members of the DMC Network 26 Figure 6.2 The Structure of the DMC Network 27 Figure 6.3 The Complex DMC Network 37 Figure 6.4 Preconditions for Consensus 53
7 INTRODUCTION Corporate Social Responsibility (CSR 1 ) is an issue that is working its way into many policy debates and corporate agendas. As several organizations decide that they must address the principles of CSR, there is a growing need for tools to help them define and address what CSR means and how to implement the concept in practice throughout the organizations. The International Organization for Standardization 2 (ISO) decided that the time had come to consider developing a management standard on CSR (IISD 2008). The term CSR is traditionally connected to business activities, but ISO has recognized that different types of organizations, and not just those in the business world, have responsibilities for the environment and the welfare of society, and for contributing to sustainable development (ISO 2007). By acknowledging that various organizations can play an active role in ensuring social responsibility, ISO has converted CSR into SR (Social Responsibility) and thereby indicated that not only the business world, but all types of organizations have the ability to take actions to ensure sustainable development, a sustainable environment and the welfare of society (ISO 2007). ISO is the designation of the future International Standard giving guidance on SR. It is intended for use by organizations of all types, in both public and private sectors, in developed and developing countries. The standard is also intended to apply to NGOs and trade unions. It will assist organizations in their efforts to operate in the socially responsible manner which society increasingly demands and will stress better performance on SR. ISO contains guidelines, not requirements, and therefore cannot be applied as a certification standard. It will not describe a (formal) management system, although the goal is to provide issue-specific guidance as well as guidance on how to address these issues in an organizational context (Somo 2007). 1 See p.73 for a list of abbreviations and acronyms. For reader-friendly purposes the appendix is constructed as a foldout which enhances clarity while reading 2 ISO, the world s leading developer of International Standards, began operating in It has a membership of 156 national standards bodies from countries large and small, industrialized and developing, in all regions of the world (ISO 2006).
8 PROBLEM IDENTIFICATION The international scene has been set for developing an ISO standard on SR - ISO 26000, which is a difficult consensus building exercise. Through the different development stages it has become evident that many stakeholders have questioned the process and asked themselves whether it is possible to build consensus at all. The sixth ISO meeting 3 enjoyed record participation from some 400 experts representing six different stakeholder group from 48 developing and 28 developed countries (CI 2008) and 37 independent liaison organizations 4 (ISO 2008). The various stakeholders that participate in the development process seek to build consensus by balancing their interests with the interests of other stakeholder groups. This is the basis for the negotiation process that takes place in the international multi-stakeholder forum hosted by ISO (ISO 2006). The consensus building exercise constitutes the problem field, because it has generated a general wonder at the possibilities of reaching consensus among such different stakeholders. However, the focus is narrowed down to a fragment of the ISO process the micro cosmos of the Danish Mirror Committee (DMC) and the consensus building exercise that has taken place within this network. ISO encourages all national standardization bodies to set up so-called mirror committees which are national networks for sharing information, exchanging views on standardization proposals and mirror the process (ISO 2006). These mirror committees should involve all interested stakeholders and the national standardization body should ensure that all stakeholder groups are represented (ISO 2006). The DMC is established by Danish Standards (DS) and consists of 18 members representing all stakeholder groups. The DMC has gone through a consensus building exercise, and therefore, this thesis evaluates consensus within the DMC network by analyzing the motives of the members, the processes that take place within the network and the members expected and realized output. This leads to the following problem statement: How do the motives, processes and output build consensus in the DMC network? 3 In Santiago, Chile, September See Appendix 3 for a full list of liaison members of the WG
9 This problem is investigated through three supplementing research questions which each represent a building block and thereby step-wise answer the main problem. Part I: Which motives do the members have for participating in the DMC network and do these motives vary according to stakeholder group? Part II: How is the DMC network structured and how are the parameters of consensus accommodated in the complex network? Part III: How does the realized output of the DMC network tally with the expectations of the network members? Consensus is a crucial term and therefore it is necessary to elaborate on this to understand how the concept is used. Figure 2.1 shows the parameters of consensus and presents the required level of each of the parameters that are necessary to obtain and maintain consensus in the network. These preconditions are presented to evaluate how the motives, processes and output foster consensus in the DMC network. Figure Parameters of Consensus
10 STRUCTURE This section presents the structure of the thesis, which is illustrated below. Therefore, the following outline is a route map to guide the readers through the thesis to provide brief details on the content of each of the thesis chapters and furthermore, to present an overview of how the different chapters unfold 5. The introductive chapters (chapters 1, 2 and 3) specify the central issues, and state why these issues are relevant to study. As presented above the introduction winds up in an identification of the problem, which the thesis explores. In the first two chapters relevant details about ISO and the DMC are presented. This is done to create a common playing field, and a solid base for further analysis of the issues evolving from the research field. The introduction only provides a short presentation of the main concepts, since ISO and the DMC are more thoroughly outlined in later chapters. Chapter four covers the methodology; firstly, the methodological position is outlined followed by an explanation of the theoretical methodology, before the practical methodology is presented. The theoretical foundation is described to develop the analytical tool that is used when analyzing and evaluating the level of consensus in the network. The second part of this chapter describes the practical methodology in detail, including an explanation of the research approach, research strategy, data collection and sampling before the reliability, validity and generalizability of the findings are evaluated. Finally, the limitations of the methodology are presented. Chapter five sets the scene, hence it is important to stress that this section presents information, which is necessary for further analysis. The first part of this chapter is a brief discussion of why there has been an increased interest and a need for private standards, which is the rationale for an international standard on SR. The following section is based on secondary data and provides an overview of the development process of the ISO standard. Chapter six is an analysis of the DMC network, which is the basis for chapter seven, which is a discussion of why the level of conflicts in the network is paradoxically low. The chapters are empirically based on the findings in chapter five and the primary data collected among the network members. The analysis in chapter six is divided into three parts based on the structure of the 5 See p.73 for an illustration of the structure of the thesis. For reader-friendly purposes the appendix is constructed as a foldout for the reader to follow the development of the thesis while reading
11 interviews; first, the motives of each organization participating in the network are presented. Secondly, the network structure is identified, followed by an evaluation of the processes that take place within the network. Finally, the last part of the analysis evaluates whether or not the DMC members have realized their expected output, before the low level of conflicts is discussed. Chapter eight concludes on the findings in the previous chapters and is a demonstration of the answers to the research questions and the problem statement. Chapter nine presents the implications for business, researchers and policy makers based on the findings in the previous chapters. Chapter ten is a short presentation and discussion of further research perspectives that have come up during the analysis of data. This chapter specifies further research topics that could create alternate approaches or another viewpoint when seeking to explore stakeholder networks.
12 METHODOLOGY The purpose of this chapter is to describe and argue for the chosen methodological approach. First a variety of theoretical arguments are presented to identify the theoretical foundation. This leads to the development of an analytical tool for analyzing and evaluating the level of consensus. The analytical tool is a combination of theoretical components and a practical framework. The latter is an extension of the theory, because it proposes additional parameters, which enables a thorough investigation of the consensus building exercise. Furthermore, the following sections present the practical methodology including a presentation of the research strategy and approach, the data collection and sampling and an evaluation of the reliability and validity of the findings. Last the methodological limitations are presented. METHODOLOGICAL POSITIONING This section outlines the path that guides the methodology chosen for this thesis. Figure 4.1 illustrates how the theoretical framework is developed through this chapter: Figure Methodological Position
13 The figure shows how the theoretical foundation is developed through Social Network Analysis (SNA) and Stakeholder Theory which amalgamated provide inputs for Stakeholder Network Theory (SNT). Based on the theoretical foundation, an analytical tool is developed. This tool is a combination of Timothy Rowley s Network Theory of Stakeholder influences and Kickert & Koppenjan s Critical Success Factors. Rowley presents two important concepts; network density and centrality, which are introduced as parameters of consensus. Kickert & Koppenjan s eight critical success factors are identified as additional parameters of consensus, which are added to Rowley s two. Their framework is developed from a network management perspective, where focus, among others, is put on interdependence between organizations and interactions between network members (Kickert & Koppenjan 1997). This complements Rowley s definition of networks and stakeholders, thus Kickert & Koppenjan s framework extends his theory. These two approaches are combined in the construction of the analytical tool that identifies ten parameters, which are used to evaluate how consensus is fostered in the network. OPERATIONALIZING THE METHODOLOGY The previous section has briefly outlined the theoretical methodology, and therefore this section explains the operationalization of the chosen methodology. Figure The Structure of the Analysis The analysis of the DMC network is divided into three parts; Part I is an analysis of motives of the 18 members of the DMC network. In this part, the motives of the members are identified. Furthermore, this analysis evaluates whether or not the motives differ according to stakeholder group. Part II starts by clarifying the network structure by identifying Rowley s two parameters; network density and centrality. This is done to understand the network structure before analyzing the processes of cooperation that take place within. For this purpose Kickert & Koppenjan s framework of critical success factors is applied as parameters to evaluate how consensus is fostered
14 in the network. Part III is an analysis of the degree of realized expectations, which indicates the level of consensus in the network. THEORETICAL METHODOLOGY The following sections outline the theoretical foundation that frames the analysis. First, Stakeholder Theory is briefly explained followed by a description of SNA which combined form the basis for SNT, which is accounted for later in this chapter. Rowley s Network Theory of Stakeholder Influences is a part of SNT, and since it constitutes a part of the analytical tool, it is thoroughly outlined in a later section. Kickert & Koppenjan s identification of critical success factors is not considered a theory; however the framework, which is explained in the end of this chapter, extends Rowley s theory. The two approaches establish the analytical tool, which is used to evaluate how consensus is fostered in the network. Finally, the limitations of the analytical tool are presented. STAKEHOLDER THEORY The theoretical underpinning of stakeholder theory arises from Freeman s Strategic Management: A Stakeholder Approach (1984), but it is acknowledged that the concept of stakeholders dates back to the 1930s (Rowley 1997). In the traditional conception of the relationship between the organization and its stakeholder, a discrete dyadic perspective is prevailing. Freeman (1984) defines stakeholders as any group or individual who can affect or is affected by the achievement of an organization s objectives (Freeman 1984:46). Many scholars have enhanced Freeman s work (Brenner & Cochran 1991; Hill & Jones 1992; Donaldson & Preston 1995), and have used his approach to construct a theory of the firm predicting how firms respond to stakeholders (Brenner & Cochran 1991). Developing stakeholder theory has focused on classifying stakeholders to understand how individual stakeholders influence firms (e.g. Carroll 1989). These classifications focus on the dyadic ties between an organization and each of its stakeholders. A common criticism of early stakeholder theories is that they do not capture the potential complex interactions among the various actors within the network (Frooman 1999; Frooman & Murrell 2005; Rowley 1997). Furthermore, they are at odds with reality when stakeholders have conflicting interests. To resolve such conflicts between stakeholders they prescribe a one-way communication strategy that is controlled by the focal organization (Vandekerckhove & Dentchev 2005; Frooman 1999). This critique is taken further by other researchers arguing that stakeholder groups are not independent actors contending for managerial attention and resources, but may also interact, cooperate and form alliances with other stakeholder groups and thereby form a network (Frooman 1999; Rowley 1997;
15 Neville & Menguc 2006). Neville & Menguc (2006) develop this perspective further by conceptualizing that stakeholder groups sometimes compete against and sometimes complement each other. Moreover, stakeholders may form strategic alliances or cooperate to increase their aligned persuasive power. Finally, stakeholders potential to influence other stakeholders and the organization is often determined by the particular nature of their role as a stakeholder within the network (Neville & Menguc 2006). The above mentioned approaches to stakeholder theory argue that stakeholders do not only act as individual firms or organizations, but also form alliances to gain more influence on firms. In order for stakeholders to gain power they often need to form alliances or become a part of a stakeholder network, which is why stakeholder theory is linked to network theory. Therefore, to understand the structure and processes that take place among stakeholders it is necessary to integrate stakeholder theory with network theory. Therefore the following section briefly outlines SNA to provide the necessary insights for SNT that is a merger between stakeholder theory and SNA. SOCIAL NETWORK ANALYSIS Network theory is a very exhaustive field of research, which is not within the scope of this paper to explain thoroughly. However, SNA is briefly explained to understand the interactions between actors in a network. The notion of social networks focuses on relationships among social entities; it is therefore neither a method nor a metaphor, but rather a fundamental tool for studying social structures. In order to understand structural analysis it is important to recognize that social structures can be represented as networks and a set of ties depicting the interconnections between the involved entities (Wellman & Berkowitz 1988). Furthermore, it involves an analysis of the patterns and implications of those social relationships (Wasserman & Faust 1994). According to Wasserman & Faust there are some basic assumptions about actors, relationships and the structure of these relationships between actors. In their view, actors and the actions of these are seen as interdependent rather than independent, and the ties between actors are the channels for transferring resources such as money or information. Furthermore, network models focusing on individuals view the network structural environment as providing opportunities for or constraints on individual actions. SNA bridges the gap between the micro-level the individuals taking part in a network and the macro-level the network itself and the identification of the structural positions and components of the entire network (Galaskiewicz & Wasserman 1994).
16 The relationships within the network are associated with power and the power structure within the network. Theoretically, actors in a central position have greater access to, and potential control over, relevant resources, such as money or information. When central actors are able to control those resources, they increase other actors dependence on them, and thereby acquire power (Krackhardt & Brass 1994). A number of researchers have demonstrated a positive correlation between power and centrality, but these findings must be handled with care, since the effects may depend on the measure of centrality. However, most researchers agree that it is not necessarily the level of resources that determines the power of an organization, but rather a set of resources that actors are able to mobilize through their existing set of social relationships (Mizruchi & Galaskiewicz 1994) SNA offers valuable insights for researchers within the field of stakeholder theories. Since network theories provide frameworks for analyzing interdependence and relationships between actors through analysis of dyadic relationships and their impact on actors or organizations opportunities, constraints or behavior, stakeholder theories are an obvious extension of network theories. From a network perspective the relevant environment is much larger than the internal actors and their behavior. Therefore stakeholder theories are linked to SNA. The network analysis approach has potential for stakeholder researchers, because they can use SNA to examine central elements from a stakeholder perspective and thereby move their research in a valuable direction. Network theories conceptualize an organization s environment as a set of social actors; which is also the traditional point of view for the stakeholder theorist. However, stakeholder researchers have not examined stakeholder influence beyond the dyadic level, which network analysis provides the means for. Therefore, SNA adds to stakeholder theories, since they provide a framework for examining the interaction of interactions, by analyzing the patterns of relationships in a stakeholder environment, which influences the behavior of an organization (Rowley 1997). STAKEHOLDER NETWORK THEORY SNT has integrated the critique of stakeholder theory by acknowledging that looking at the dyadic ties between an organization and its individual stakeholders does not correspond with reality. SNT goes beyond classification of individual stakeholders and their influence on the organization and acknowledges that they do not act upon each stakeholder individually, rather they respond to the interaction of multiple influences from the entire set of stakeholders (Frooman 1999; Rowley 1997). Therefore, stakeholder network theorists have merged stakeholder theory and SNA and thereby
17 developed a new perspective in which focus has moved from the individual stakeholder and its tie to an organization towards the network of various stakeholders and their individual and accumulated influences on an organization (Rowley 1997). Frooman (1999) states that stakeholders may attempt to influence organizations directly or indirectly through alliances with other stakeholders. Frooman (1999) argues that even though stakeholders lack sufficient power to influence organizations, they may manage to influence by creating alliances with other, more powerful, stakeholders. The four strategies presented by Frooman (1999) are developed on the basis of resource dependence theory (Pfeffer & Salancik 1978), and the concept of power. The balance of power determines which of the four strategies a stakeholder will choose. These complex interactions between stakeholders are based on Oliver (1991) referring to stakeholder multiplicity, defined as the degree of multiple, conflicting, constituent expectations exerted on an organisation (Oliver 1991:162). Whereas Frooman (1999) develops strategies for stakeholders to influence a firm, Rowley (1997) develops strategies for the Focal Organization (FO) by creating a matrix of high/low density and high/low centrality. Thereby a specific role for the FO can be identified. Rowley s theory is outlined thoroughly in the following section because his theoretical approach establishes a frame for the analysis. ROWLEY S NETWORK THEORY OF STAKEHOLDER INFLUENCES In Moving Beyond Dyadic Ties: A Network Theory of Stakeholder Influences Rowley (1997) develops a SNT by combining stakeholder theory with SNA which enables him to move beyond Freeman s (1984) dyadic relationships of an FO and its stakeholders. In his article, he constructs a theory of stakeholder influences, which accommodates multiple, interdependent stakeholder demands which predicts how organizations respond to the simultaneous influence of multiple stakeholders. Hereby, Rowley states that stakeholders do not only affect and are affected by an FO, but also interact with each other in a stakeholder network. This line of thinking is an extension of stakeholder theories outline in section 4.4, where stakeholders are identified as actors in a network rather than individual actors that form alliances or networks to gain influence on a firm or other organizations. Rowley introduces two main characteristics to identify the structure of the network; network density and network centrality. These characteristics traditionally belong to SNA, where e.g. Wasserman &
18 Galaskiewicz (1994) introduce the concept of centrality and Krankhardt & Brass (1994) emphasize that when central actors are able to control resources they thereby increase other actors dependence on them, and thereby they acquire power. Network density is based on Wellman & Berkowitz s (1988) identification of network ties, and the importance of exploring these ties to understand the structure of the network. Rowley (1997) uses the term density to denote the interconnectedness of the surroundings, which is introduced by Christine Oliver (1991), who argues that interconnectedness of relational network influences an organization s degree of resistance to institutional pressures (Oliver 1991). Density of a network is measured as the relative number of ties in a network that link actors together. It is calculated as a ratio of the number of relationships that exist in a network compared with the total number of possible ties if each network member were tied to every other member (Rowley 1997). Therefore, higher density includes a relatively more efficient communication structure within the network, where stakeholders can coordinate their efforts to monitor and punish the focal organization, and the focal organization can influence the formation of expectations (Rowley 1997:901) The term centrality refers to an individual actor s position in the network relative to others. Brass & Burkhardt (1994) argue that people in central network positions have greater access to and potential power over, relevant resources such as information. Therefore, actors that are able to control the relevant resources, and thereby increase other actors dependence on them, are in a position to acquire power over other actors. The greater the centrality of a firm in a network, the more the firm will be able to resist pressure from other stakeholders. The level of density and centrality is used by Rowley to create a matrix, which provides four strategies, which show how an FO handles stakeholder pressure. NETWORK THEORY OF STAKEHOLDER INFLUENCES AS METHODOLOGY This section explains Rowley s (1997) network theory of stakeholder influences with regards to the applicability of the theory as methodology. Thus, Rowley s concepts; network density and centrality are used to describe the structure of the DMC network, and furthermore, it is a way to understand and create a clear overview of the network in question. This is necessary for further analysis of the processes that take place within this structure and to analyze these Kickert &
19 Koppenjan s (1997) framework of critical success factors supplement Rowley s theory to evaluate whether or not the DMC network has reached consensus. NETWORK MANAGEMENT Network Management is based on the concept of networks and the analysis of these in order to find strategies for effective network management. Therefore, this line of thinking belongs to traditional network theory, which is the rationale for using this framework as an extension of SNT. Empirical studies of network management and its effects are scarce, and there is a lack of systematic research on the effectiveness and success of network management. However, many authors have emphasized various preconditions and critical success factors for network management. The factors provide a framework for analyzing the processes that take place within a complex networks, and provide conditions for network management. These factors are identified as: the number of actors; diversity within networks; the closed nature of networks; conflicts of interests; the costs of network management; the political and social context; leadership and commitment power and skills (Kickert & Koppenjan 1997). The success of a network is therefore based upon the relationships and factors not only within the network, but also the external environment. When added to Rowley s theory, and the notions of centrality and density, these eight factors are chosen to establish an analytical tool for evaluating the level of consensus. NETWORK MANAGEMENT AS METHODOLOGY Kickert & Koppenjan s (1997) identification of critical success factors form a framework for studying the processes in the DMC network, and therefore this framework is applied after the network structure is identified using Rowley s theoretical approach. The critical success factors are introduced as means for analyzing the network to answer the research questions concerning the processes that take place within the network. THEORETICAL LIMITATIONS Rowley s (1997) theory results in an identification of four network configurations and firm strategies, which are based on the interaction of density and FO centrality. These attributes produce different types of networks, which influence the power relations between the FO and its stakeholders. Since this thesis does not focus on an FO, and therefore does not seek to identify organizational responses to stakeholder pressure, the four strategies of the FO are not valuable for the analysis of the DMC network. This focus is not appropriate in the thesis, since the focus here is
20 based on the network of many organizations, of which none are seen as focal. However, the concepts of density and centrality are very valuable for the analysis of the DMC network, and therefore these have been applied to analyze the network focusing on ties between the actors. It is however, acknowledged that the theory presented by Rowley (1997) has a different purpose than this thesis, since it identifies strategies of an FO. The author is aware of the limitations, the different use of the theory creates. The aim of this analysis is not to identify strategies, but to identify network density and centrality to analyze the network structure and evaluate the level of consensus in the network. Thus, Rowley s theory does not provide a sufficient basis for analysis, which is why Kickert & Koppenjan s framework of critical success factors of network management is added. This creates an analytical tool for evaluating the fostering of consensus. However, Kickert & Koppenjan s framework also has its limitations. First of all, they identify eight conditions for network management, which are preconditions for the method and also potential success factors. These eight factors; the number of actors, diversity within networks, closed nature of networks, conflict of interests, cost of network management, political and social context, leadership and commitment power and skills are important when analyzing networks in general. In the case of the DMC, they are all considered equally important, even though some might have greater impact on consensus than others. Furthermore, the critical success factors are developed as means to evaluate the management of complex networks in the public sector. However, the DMC is a private network initiated by a private company, DS, to provide inputs to another private company, ISO. It is, however, considered irrelevant whether or not the network is private or public when using the ten parameters of consensus. They are only used to create a frame for analyzing the processes within the DMC network, and therefore it is irrelevant that they are developed for public sector purposes. PRACTICAL METHODOLOGY The following paragraph discloses the practical methodology used. The selected path eliminates certain directions the thesis might have taken, since the chosen strategy and approach create a specific frame which is followed throughout the thesis. The eliminated directions are accounted for in the last part of this section, where the limitations of the methodological directions are considered. In addition this section provides a route-map to understand how the data has been collected and which consequences this has for the analysis and the conclusions of this thesis.
21 RESEARCH APPROACH The primary approach chosen for this thesis is abduction, however some inductive and deductive elements occur. The starting point of this approach is the empirical setting, in this case the DMC network, which is analyzed through an identification of the factors that lie behind the observed object: the network and explains the structure and relations within the network (Olsen & Pedersen 2003). The abductive approach is chosen to build and generate implications for future network settings on basis of the core themes and findings from the analysis, which are based on the qualitative interviews conducted for this thesis. Therefore, the abductive approach forces the researcher to discuss the empirical findings in relation to the arguments grounded in the theory (Saunders et al. 2003). In the abductive perspective the sampling is purposive, where the critical case is chosen to analyze and explore the DMC network to find implications for future network setups (Saunders et al. 2003). The abductive approach combines elements from deduction and induction, because the initial approach is to move from theory to data, since the analysis is based on a theoretical framework, however, the thesis also has an empirical purpose as it provides implications based on the findings in the analysis (Olsen & Pedersen 2003). The theoretical frame gives the project the possibility of keeping focus on the main purpose, namely determining the fostering of consensus in the complex DMC network. The abductive approach offers a research approach which is based on an iterative process, where the researcher first explains some causal relationships between variables such as critical success factors and an evaluation of the consensus in the network. Consequently a problem statement is developed, which is answered through a thorough data collection via interviews with DMC members. The researcher is required to develop a highly structured methodology to ensure reliability, thus the involved concepts in the analysis must be operationalized, so the facts can be measured and analyzed to find answers to the proposed problem statement (Saunders et al. 2003). RESEARCH STRATEGY After choosing the appropriate research approach, a suitable research strategy must be designed. There is a large variety of different strategies, which are not mutually exclusive. However, the research strategy selected for this thesis is based on a case study of the DMC network. According to Robson (2002) a case study is a strategy for doing research which involves an empirical investigation of a particular contemporary phenomenon within its real life context using multiple
22 sources of evidence (p.178). The study is of explanatory character, and therefore the in-depth interview is the most appropriate way to collect information (Saunders et al. 2003). DATA COLLECTION First, the interviewer has ed an enquiry to the respondents and presented the theme of the thesis (Appendix 4) to ensure that the respondents did not accept to participate in the case study on false terms. In two cases the questions were ed to the respondents beforehand to enable them to prepare the answers, but this was not requested and therefore not considered necessary in the remaining interviews. After conducting the interviews the interviewer transcribed the interviews and ed them to the respondents for them to check and correct any misunderstandings or misinterpretations. Furthermore, the specific sections, where quotes and references to specific interviews are made, have been sent to the respondents to avoid misinterpretations and ensure that the quotes are presented in the correct context. Thus, the chance of misinterpretations should be limited and the aim is that both questions and answers are received and interpreted as intended by the interviewer and respondents respectively. This ensures validity and reliability of the questions, the answers and the interviews in general. The interview form used in the case study of the DMC is constructed as structured interviews, which are based on a predetermined and standardized set of questions (Appendix 7), where the interviewer physically meets with the respondents and asks the questions face to face (Kvale 1996). The structured interview form, based on a standardized schedule of questions, is chosen since the study has explanatory and analytical character, which examines and explains relationships between variables. This interview form ensures a higher response rate than if having used another approach, such as if for example an questionnaire, was chosen. The interview form is chosen due to the length of the questionnaire, as these are best presented as a structured interview. In addition, using this type of interviews enables the interviewer to include more complicated questions, since she will be able to elaborate on the questions if needed to clarify obscurity or ambiguity. By being present the interviewer can ensure that the question is understood by the respondent in the way intended by the interviewer and the answer given by the respondent must be understood by the interviewer in the way intended by the respondent (Saunders et al. 2003). The interviewer reads out each question and record the response on a standardized schedule. In order to avoid biases the interviewer must
23 ensure that the questions are read out loud using the same tone of voice for all interviews (Kvale 1996). One interview is due to logistical matters conducted as a telephone interview, but the structure of the interview does not differ from the face to face interviews. In addition, another interview is conducted as an -questionnaire as requested by the respondent, since this respondent did not have time to schedule an interview. This interview differs slightly from the others since the answers are shorter and less elaborated on than the recorded oral answers. SAMPLING The DMC network consists of Maibritt Agger from DS, who organizes the network by forwarding information from ISO, sending reports and summaries from meetings, and initiating meetings in cooperation with the chairman and the group of experts (MAII:A12 6 ). Since her position is rather different from the other members, she is not a part of the general sample, but has provided valuable information about the ISO process, the network in general and her special position within the network through in-depth interviews, which differs from the standardized questionnaire used to conduct the remaining interviews (Kvale 1996). The total population consists of 18 members besides Maibritt Agger from DS; eight industry stakeholders, four NGOs, two government representatives, two Service, Support, Research and Others (SSRO) stakeholders, one labor representative and one consumer stakeholder. Of the total population most organizations have agreed to participate in the case study. The current member of the network from the consumer stakeholder group, Mette Boye, has not attended any meetings, and therefore she would rather not participate in an interview, as she evaluated her knowledge of the network too limited (Appendix 25). The lack of one respondent does however mean that the sample does only represent 94.4 per cent of the total population, which is considered acceptable to obtain validity. THE TRINITY OF GENERALIZABILITY, RELIABILITY AND VALIDITY In modern social science the concepts of generalizability, reliability and validity have reached a status of a scientific holy trinity (Kvale 1996). The issue of generalization has been treated in relation to case studies, and according to Kvale (1996) there are three types of generalizability; 6 References to appendices are provided as follows: the first two letters refer to the abbreviation of the name of the DMC member (in this case MAII: Maibritt Agger second interview) and AXX refers to a specific page in the appendices.
24 naturalistic, statistical and analytical generalization. The latter kind of generalization involves a reasoned judgment about the extent to which the findings of one study can be used as a guide to what might occur in other situations. The case study of the DMC network can to some extent be used as a case example, and therefore, it may help predict what may happen in other network situations. Furthermore, since the stakeholder engagement approach is somewhat new to ISO and DS, implications from this study are considered important in future situations, where network management is appropriate. Therefore, the findings of this thesis is subject to generalization, and can be used to create a guide to what might happen in other situations when a network approach is chosen (Kvale 1996). Reliability pertains to the consistency of the research findings. There are several issues concerning reliability that emerge during the interview process, i.e. when transcribing and analyzing the data. In order to ensure reliability of the data, the interviews were conducted in Danish, as this is the mother tongue of the interviewer and all but one of the interviewees. Danish was chosen to avoid misunderstandings and language barriers that may occur when operating in a foreign language. Secondly, the interviewer expects that the answers are somewhat more eloquent, when the questions are answered in the mother tongue. Furthermore, since both the interviewer and the interviewees are familiar with Danish culture as members of Danish society, it is considered that cultural misunderstandings do not occur (Kvale 1996). Validity refers to the truth and correctness of a statement and is ensured by providing sufficient information about the questions to the interviewees prior to the interview (Kvale 1996). When designing the interviews for this thesis there has been a thorough attempt to overcome biases, since the enquiry sent to the interviewees included a brief introduction to the themes this thesis explores (Appendix 4). In addition, to ensure validity a pilot interview was conducted to ensure that the questions were correctly understood by the interviewees, and sent to three impartial persons to be certain that the questions were clear and easy for the interviewees to understand. Concluding, great effort has been put into ensuring generalizability, reliability and validity by choosing a methodology that best overcomes potential biases. LIMITATIONS The following section presents the limitations that may occur as a result of the chosen methodology. Quotations marked with * are the author s translation of the interviewees answers. These were
25 given in Danish, however, since these quotations are translated into English, misunderstandings may occur. Therefore, the reader must be aware that the * -marked quotes are translations and not the direct presentation of the interviewees answers. In order to avoid such misunderstanding, the paragraphs where direct quotations are used, have been sent to the interviewees to control that they have been quoted correctly and within the right context. Access to the network was gained through the author s student job at DS. In this case it is important to consider potential biases, while if not considered they may occur automatically as a result of information and data collection through DS. However, the author seeks to avoid biases that may occur through the direct contact to DS, and this is done partly by choosing a topic that is not within the job description for the students at DS. The author explained her connection to DS in the enquiry (Appendix 4), which may have helped gaining access to the respondents, but besides that, the author has not used her connection to DS during the interview process. The representative at DS, Maibritt Agger, has provided relevant knowledge about the ISO system, and ensured access to the network. However, the first interview with Maibritt Agger, DS (Appendix 5) was solely arranged to obtain knowledge of the ISO process and gain access to the DMC members. To avoid biases the last interview (Appendix 6) was conducted subsequent to the interviews with the regular DMC members to avoid being biased by her answers. The fact that consumers lack representation in the case study eliminates the ability to cover all stakeholder groups equally. This problem has been overcome by using information from DS explaining why the Consumer Council chose to participate in the DMC in the first place and because one of the industry representatives used to be a consumer representative and therefore explained some of their motives during his interview. Therefore, attempts to overcome this bias have been made to provide a full analysis covering all stakeholder groups. The last limitation is known as the social desirability bias, which refers to the fact that respondents are often unwilling or unable to report accurately on sensitive topics. The result is data that are systematically biased toward respondents' perceptions of what is "correct" or socially acceptable. Not only is social desirability bias pervasive, but it can lead to the reporting of spurious or misleading research results (Fisher 1993). These limitations are kept in mind, but are considered of less importance to the analysis and the conclusions, because precautions are taken to avoid biases due to these limitations.
26 SETTING THE SCENE The following chapter sets out to explore the scene of the case study and starts by examining the rationale behind private standards such as the ISO The subsections that follow include an introduction to the ISO and the line of thinking behind the establishment of mirror committees. WHY PRIVATE STANDARDS? The ISO is a private standard, and before entering the zone of standardization it is important to rest upon the question why private standards are needed, when a large number of national, regional and international standards already exist (Pedersen & Neergaard 2006). There has been a shift from the government intervention in the decades after the Second World War, where states governed the markets by economic regulations. From the 1980s onwards there has been a paradigm shift towards privatization, removal of trade barriers and thus less government intervention. The declining public sector has caused a rise in private actions from companies and industries, where they use private self-regulation. Self-regulation has its shortcomings, because it leaves responsibility to the morality of the individual organization. Furthermore, private regulation in relation to SR can be an attempt of greenwashing, hence companies seek to satisfy stakeholders to avoid damaging their reputation by violating human rights etc., it can be difficult to monitor their actions and control their reporting (Neergaard & Pedersen 2003). Additionally, the reliability and validity of private self-regulation and private labeling can be of questionable quality, which may undermine the original intention of the company (Pedersen & Neergaard 2006). The large number of more or less reliable standards and labels is the reason why ISO has decided to create a standard on SR. A strategic advisory group (SAG) sat out to investigate whether or not there was a demand for an international standard, and by 2004 a WG was established to create a new international standard for SR based on a multi-stakeholder process to engage as large a number of stakeholder as possible (ISO 2004b). INTRODUCTION TO ISO SR has been the focus of many researchers and business scholars for the past two decades. Both proponents and opponents of SR have presented strong arguments; Proponents such as business scholar Michael Porter advocates the need for a proper balance in the discussion of CSR, where CSR activities are not connected to a fixed trade-off between economy and ecology. Furthermore,
27 the belief that for instance environmental regulation will destroy competitiveness still prevails (Porter & van der Linde 1995). However, Porter s win-win arguments are questioned by opposing scholars, such as Walley & Whitehead (1994), who are more skeptical towards the notion of solely positive financial returns of CSR. There has been a shift in the agenda for the need for CSR in the business press. The magazine The Economist has investigated and analyzed CSR for many years and previously the point of interest was to question whether or not CSR is necessary. In that line of arguments surveys have been conducted, which have concluded that CSR was very ineffective and not a value-add to the company (Economist 2005). However, this agenda has shifted recently, and in January 2008, The Economist printed a survey in favor of CSR, stating that CSR needs to be on the business agenda, as it is necessary for companies to do good to do well (Economist 2008). There are many suggestions on how to do good in the best possible way, and ISO is in the process of developing their version on how to do good better, an international standard on SR the ISO The standard is created on the basis of the general recognition that SR is fundamental to organizational sustainability. This recognition is expressed not only through the research of business scholars, but also through the general concern of the public, and the increased attention given to issues related to sustainability, environmental and health-and-safety issues that have been on the agenda at national, regional and international levels. The development of the standard has been an extensive process, which is illustrated below: Figure Project Plan for development of ISO on SR Adapted from Schmiedeknecht (2008)
28 The ISO council initiated the standard in 2001 by establishing SAG, which concluded that ISO should go ahead and develop the standard, and provided a set of key conditions that had to be met (ISO 2004b). A multi-stakeholder conference held in Stockholm 2004 led to the same conclusion as the SAG; a WG was established and the work towards an international standard on SR began (ISO 2006). The development process for the standard on SR is an unfamiliar approach for ISO, because it involves engagement of multiple stakeholder groups and therefore requires an adaptation of ISO s normal working methods (ISO 2004a). In January 2005, 32 of 37 voting members of ISO voted for developing a standard on SR and agreed on the basic guidelines for developing the standard (ISO 2006). The standard should: - Assist organizations in addressing their social responsibilities while respecting cultural, societal, environmental and legal differences and economic development conditions. - Provide practical guidance related to: o Operationalizing social responsibility o Identifying and engaging with stakeholders, and o Enhancing credibility of reports and claims made about social responsibility - Emphasize performance results and improvement; - Increase confidence and satisfaction in organizations among their customers and other stakeholders; - Be consistent with and not in conflict with existing documents, international treaties and conventions and existing ISO standards; - Not be intended to reduce government s authority to address the social responsibility of organizations; - Promote common terminology in the social responsibility field; and - Broaden awareness of social responsibility ISO (2004a) In addition to the ISO is expected to foster greater awareness and wider observance of agreed sets of universal principles; these principles are conventions and declarations made by the United Nations, in particular the Universal Declaration of Human Rights, but also including the Global Compact. Furthermore, The International Labour Organization s Declarations on Fundamental Principles and Rights at Work are implemented as significant principles of the standard. Environmental and developmental conventions and declarations are also added to the core
29 principles of the standard, primarily based on The Rio Declaration on Environment and The United Nations Convention Against Corruption 7 (ISO 2004a). The establishment of the WG is based on national standardization bodies nomination of up to six experts, one representing each stakeholder category; Consumer, Government, Industry, Labor, NGOs, and SSRO (ISO 2004a). Furthermore, the national standardization bodies are expected to establish national mirror committees to consider the national positions on the successive drafts developed by the WG. Furthermore, the mirror committees should be well-balanced, and comprising a balance of all national interests and stakeholder categories (ISO 2004a:18). This should ensure that all stakeholder categories are represented at the mirror committee meetings, and if possible, all six stakeholder categories should be represented in the national delegation at the international ISO meetings. Furthermore, a number of experts can attend the meetings. These experts are either appointed by an ISO member body or an external liaison organization 8, but it must be clear that he or she acts according to his or her capacity in the stakeholder category and thus not necessarily as an official representative of the national body that appointed him or her. However, the WG recommends that the nominated experts stay in close contact with the national ISO member to assure that information and the various opinions in the WG are passed on to the national body (ISO 2004a). This on-going contact between the experts and the national body is essential to reach consensus within the WG. Stakeholder Consensus within the WG has been reached at the sixth international meeting in Chile in September 2008, which enables ISO to move up in development status to stage three (in Figure 5.1) and is now a Committee Draft (ISO 2008). When the committee draft is accepted, the final draft of the international standard is prepared and all comments integrated, which enables the final voting round, where the full backing of the liaison organizations is sought before the new International Standard, ISO will be published (ISO 2004a). 7 See Appendix 1for a full list of SR initiatives, conventions and declarations 8 See Appendix 2 for a full list of potential liaison organizations
30 ANALYSIS The analysis of the DMC is based on the 20 interviews 9 conducted among 17 of the 18 members of the network and the network initiator from DS, who have worked together for up till four years on the ISO project. Some of the members have attended meetings since the beginning of the process, while others have just recently registered their organization as member of the network. The following chapter starts with a presentation of the DMC which leads to a tripartite analysis, which is structured according to the framework of the interview guide. First, the organizations motives for participating in the DMC are explored as it is expected that different organizations have different motives for cooperating in a standardization-network. Secondly, the network structure is outlined before the processes that take place within are analyzed. Lastly, the expectations of the members are investigated to evaluate to which degree the expected output has been realized. The tripartite analysis is a study of the different mechanisms within a network that aim at reaching a common goal: An effective and satisfying development of an international standard on SR, ISO Thus, the network must have built consensus if this goal is reached. THE DANISH MIRROR COMMITTEE The members of the national mirror committee in Denmark have followed the development process of the ISO as outlined in the previous sections. This section, however, presents the members of the DMC, and their positions in the Danish network. The term Mirror Committee is defined by the WG because it is expected that the member bodies which nominate experts will also establish national mirror committees and that these mirror committees will establish national positions on the successive drafts developed by the working group. (ISO 2004a:16) Furthermore, the mirror committees are established for sharing information in the national network and exchange views on standardization projects and proposals, and thereby mirror the development and ensure a balanced stakeholder representation. An additional task for the mirror committee is to establish the national viewpoint on work being carried out within ISO and mirror the process both within the task groups and the WG (ISO 2006). Furthermore, the national standardization bodies are invited to nominate up to six experts to serve on the WG, one for each of the stakeholder categories (ISO 2004a). The national standardization bodies can also nominate observers, who have the right to follow the proceedings of the WG (ISO 2006). 9 The author has made one interview with each of the members, and two interviews with the network initiator and organizer, Maibritt Agger, DS.
31 ISO strongly encourages the national standardization bodies to form mirror committees to monitor and generate new insights for the national delegations at the international meetings. DS took this encouragement seriously from the beginning of the process, and prior to the meeting in Stockholm in 2004; DS invited 150 organizations to participate in an information meeting about ISO The 150 organizations were selected on the basis of presumed interests in the SR field. DS estimated that this approach would attract the most interested organizations, and thereby establish a solid ground for creating a mirror committee (MAI:A8). Furthermore, a group of experts was established as a team varying from 6-12 experts, each representing a stakeholder group, who were appointed experts and observers and were expected to participate in the Danish delegation at the international WG meetings (MAI:A11). DS specifically invited organizations that had shown particular interest in the DMC, and launched a specific section on their homepage that also aimed at attracting interested organizations. Furthermore, PR activities resulted in a full-page article in Berlingske Tidende, which resulted in more press coverage. It is, however, not easy to find articles and reports within the Danish media that covers the development of ISO and the work of the DMC 10. On the other hand, DS has assessed that other initiatives would attract organizations that would show more interest in the field. Therefore, Maibritt Agger, DS, hosts network forums for interested organizations and individuals (MAI:A8). However, according to some of the present members of DMC, the most effective form of recruitment for the network is a process of word-of-mouth, because the members know each other from other networks and work within the national CSR context (BBN:A60). The network was little by numbers in the beginning of the process, and according to the chairman there is no doubt that as soon as it became a question of paying for the membership, many organizations decided not to participate. Many of the industry-stakeholders considered that they were already represented through DI, and for others it was a question of resources, such as working hours* (AGL:A18). The network has increased in number of members, and currently it consists of 18 members representing the six required stakeholder groups, and the network initiator, Maibritt Agger from DS. 10 The author of this thesis has searched for ISO in the archives of relevant newspapers in Denmark; JyllandsPosten, Berlingske Tidende, Berlingske Business, Politiken, Information, Børsen and Erhvervsbladet from 1 January 2004 till 1 November 2008, and only 3 hits were found in Berlingske Business and Erhvervsbladet
32 Figure Members of the DMC 1 The members that are underlined are experts participating internationally 2 Villy Dyhr was previously employed at Danish Consumer Council, which he represented in the DMC. He is now an observer for the industry-group 3 Mette Boye did not participate in the case study for this thesis In the light of the respondents answers the author has broken the network into smaller groups according to the degree of their participation. Four subgroups have been identified within the network. This division of members is important to understand the structure of the network and the processes that take place within. Figure 6.2 shows that there are very different levels of engagement among the members. Arne Jensen, Dansk Metal states that 20 per cent of the members contribute with 80 per cent of the inputs, however, he adds: I do not have the feeling that anyone is left out or experience that they cannot get through with their points of view* (AJ:A55). The division within the network is commented upon by several members: those who have become experts and participate in the international work, they have a special role, and have certain knowledge [ ] that others do not have* (KS:A36). Furthermore, Birgitte B. Nielsen, IFU, adds that the experts are
33 more dominant since they are the ones that know what goes on in the international working group, and many of the other members only attend the [national] meetings to listen* (BBN:A63). Figure The Structure of the DMC Network Kim Christiansen states that there is an imbalance in the network since some of the dominant members also attend other networks such as Anne G. Larsen, Novo Nordisk A/S, Majbritt Agger, DS and Birgitte B. Nielsen, IFU, who are also members of another CSR network Overskud med Omtanke, which has given them competencies that other members do not have (KC:A46). On the contrary most respondents note that the members are on equal terms with regards to being heard while attending the meetings. Arne Jensen, Dansk Metal states that members are evaluated on the basis of what they say and not on who they are* (AJ:A50), but he also adds that the experts are more dominant, and especially the chairman Anne G. Larsen, plays a very central role because she has knowledge from her background at Novo Nordisk A/S to draw upon. Furthermore, Kim Christiansen plays a double role since he is employed at DS and is a DN activist, and therefore knows both sides well, as he combines the NGO points of view with the basic knowledge about standardization. Kirsten Schmidt, AAU represents the consultant-perspective, which is very valuable in the network, and Arne Jensen represents the labor stakeholders (AJ:A55). Consumers have lost their strong representation since their first member, Villy Dyhr switched from the Danish Consumer Council to Dong Energy A/S and now attends meetings with a more moderate mandate, since he is no longer appointed expert for the Danish delegation at the international meetings, and thus attends as observer (KS:A35).
34 Most members add that the dominant members only affect the network positively since they have a good grasp of the development of the standard and also know which arguments usually work in the international forum (MHK:A68; MB:A128; SG:A108; LL:A114). Marie Busck, Danish Institute for Human Rights, adds that the dominance is well-deserved, because the dominant members have read the documents and comments thoroughly, and are better prepared because they know what happens internationally (MB:A128). The dominance is linked to the resources each organization has invested in the network; Novo Nordisk A/S has invested many resources not only through their chairmanship in the DMC, but also internationally. From the starting point they were willing to undertake the role as chairman for the international WG (AGL:A18), which ended up as a twining arrangement between the national standardization bodies in Sweden and Brazil (ISO 2006). Furthermore, Novo Nordisk A/S has contributed to the ISO Trust Fund, which enables developing countries to attend the international meeting and set up national mirror committees (AGL:A25). This large investment of resources; membership fee, trust fund donations, working hours spend on planning, preparing and attending meetings nationally and internationally is noted by many respondents as the reason for dominance which is a natural consequence of a large dedication to the project. In the other end of the spectrum, the organizations that do not invest as heavily in the DMC, accept that they are not dominant actors of the network. Claus Frier, Novozymes A/S, responds that it is a question of priorities, because attending international meetings and going deeper into the network requires extra resources, which some organizations are not willing to devote (CF:A75). The more peripheral members are aware of their position (CF:A75; MB:A127; CP:A104; LL:A115), and they do not consider it a problem for the network and their influence on the development of the standard. To understand the structure of the network that has been explained and illustrated above, it is important to remember that the group of experts is formally constructed according to ISO principles, which imply that it consists of maximum one expert nominated from each of the six stakeholder groups plus maximum two nominated observers (ISO 2004a). Some of the six experts were obvious candidates since they were the only member of their stakeholder group, whereas others like e.g. Industry, SSRO and NGOs had more members to choose from, therefore, a little mingling ensured that all interested actors were nominated experts, It is not my impression that there are members [of the DMC], who wanted to attend the international meetings, but did not have the opportunity. Conversely, I would argue that we have had trouble filling the posts* (KS:A35).
35 Since ISO has dictated the structure the formal network, informal networks and lobbyism may have great importance and keeping ISO s principles in mind, the DMC structure seems to have developed from the formal rules and into an informal network, where all members are not equally dominant, but they each have a saying in most matters. The next chapter is a thorough analysis of the DMC, the motives of the members, an identification of the network structure, and the processes that take place within, and finally, the members expected and realized output. The tree parts of the analysis each represent a building block for analyzing the network with regards to the motives, processes and output to evaluate consensus building in the network. PART I: THE MOTIVES The first part of the analysis is an exploration of the motives that the DMC members have for participating in the network. This section sets out to explore the motives of the 18 members of the DMC network. The aim of this section is first of all to clarify the various motives the different members have for network participation, and furthermore to find out whether these motives vary across stakeholder groups. Therefore this section takes another step towards finding the answer to the problem statement of this thesis by answering the following question: Which motives do the members have for participating in the DMC network and do these motives vary according to stakeholder group? The different organizations represent different stakeholder groups, thus it is difficult to imagine that organizations as different as the Institute of Human Rights or the labor-union Dansk Metal have the same motives as companies like Carlsberg Breweries A/S, Coloplast A/S or Novo Nordisk A/S. However, Maibritt Agger at DS, who is initiator of the DMC, states that for all members of the DMC it is both the end product in shape of the standard and the network in itself that are important motives (MAI:A8). For example, Kirsten Schmidt, AAU states that being a part of the network is an investment in knowledge [ ] and people, I would like to work with and a network I would like to maintain* (KS:A34). This statement is complemented by Birgitte B. Nielsen, IFU: 'I want to be a part of the process, because it means a lot to get an international network [...] In my job I need to
36 know about the international agenda, and I get this knowledge through the ISO co-operation*' (BBN:A64). MOTIVES ACCORDING TO STAKEHOLDER GROUP Each organization belongs to one of the six stakeholder groups, and therefore it is interesting to investigate whether or not the different stakeholder groups have different motives for participating in the network. First, it is important to explore whether or not the organizations in a specific stakeholder group have similar motives or if these also vary among the individual organizations. Therefore the following section explores the members motives, first to find out if these are mainly individual motives, and secondly, to find out whether they vary according to stakeholder group. Industry The industry stakeholder group consists of the following eight representatives; Anne G. Larsen, Novo Nordisk A/S; Villy Dyhr, Dong Energy A/S; Claus Frier, Novozymes A/S; JAnda Campos, Carlsberg Breweries A/S; Annemarie Meisling, DI; Christian Honoré, Coloplast A/S; Jes Faltum, Lego System A/S and Lars Ludvigsen, PR Partner. These organizations are very different when looking at management, products/services, organizational structure, employees etc. However, their motives for participating in the DMC are quite similar. Anne G. Larsen states that Novo Nordisk A/S s motives are based on the fact that they as a company have practical experience with SR. She adds that it is not because the company is in desperate need for a standard, but rather because they believe in the partnership element and in stakeholder engagement. Novo Nordisk A/S has a strong reputation, at least in a Danish context, and along with their SR-experience they want to support the development of the standard by adding their reputation, experience and resources (AGL:A18). Dong Energy s representative has a special role in the network since he started as consumer representative, who also participated internationally in the early beginnings of the standard because he represented Consumers International in the SAG which examined whether or not ISO should develop a standard in this field (VD:A70). Therefore, Villy Dyhr has both personal motives along with the motives of his organization, Dong Energy A/S. Villy Dyhr used to be a very active member, but he switched job and became member of the industry stakeholder group, of which Anne G. Larsen was nominated expert. Therefore, Villy Dyhr cannot attend the international meetings as Danish expert, but since the Danish delegation had a vacant observer position, he attends the international meetings as observer (KS:A35). About his position in the DMC he notes that he does not try to dictate the course of the development, but that he just follows it and adds his opinion
37 when needed (VD:A70). Furthermore, he adds that he convinced the management at Dong Energy A/S to let him continue his work in the DMC, because he wants to participate in the network. It is important for Dong Energy to know what happens and when it happens, and since Villy Dyhr has been part of the development since the beginning he thereby gives his company a chance to influence the standard. However, he does not mark the network significantly, but attempts to keep the development on track and thereby ensure that Dong Energy s interests are taken care of (VD:A70). Claus Frier, Novozymes A/S s representative adds that Novozymes A/S like Dong Energy wants to know what goes on in the SR field. Therefore the company has a strong interest in following the development and the national and international discussions, because these express the line of thinking about SR, which Novozymes A/S can learn from. The company is already highly engaged in SR, and standards and common guidelines have always been a significant corner stone when talking about CSR* (CF:A74). Since Novozymes A/S like Novo Nordisk A/S has a strong SR profile, the company has great interest in a standard that follows the line of thinking of their organizations (CF:A74). Janda Campos adds that her organization, Carlsberg Breweries A/S, wants to be a part of a network that gathers the different initiatives and thereby create transparency about SR. Carlsberg Breweries A/S wants to take part in the development of a global standard that is acknowledged worldwide. Furthermore they have decided to participate in the network to be aware of what goes on in the SR field (JC:A84). Her predecessor in the DMC network, Knud Hedeager, adds that Carlsberg participates in the [net]work about ISO to exchange knowledge and experience with other companies and organizations. It should promote the development of guidelines and tools, which can create an optimal frame for organizations practical work with [C]SR* (DS 2006:12). In addition, Christian Honoré from Coloplast A/S states that he attended the network of two reasons: partly, because Coloplast A/S wants to contribute to the development of new standards, as this is a part of their CSR strategy, and partly because they want to follow the development and try to influence the standard to ensure that it fits with Coloplast A/S s already established CSR strategy (CH:A88). DI assesses that it was very important to participate and influence the process. Annemarie Meisling, DI, adds that fundamentally, it was an important work that [we] wanted to take part in, and try to influence* on behalf of the Danish business community (AM:A95). Lars Ludvigsen, the director of PR Partner, has slightly different motives than the rest of the group, because he wanted to learn about the discussion of terminology between CSR on one hand and sustainability on the other. SR was a field that consisted of various schools and unclear terminologies, and Lars Ludvigsen wanted to learn how the Danish network would define and work
38 with SR. His motives were personal, since he wanted to learn more and thereby be able to advise his clients about SR and how to communicate about it (LL:A ). Lego System A/S motives on the other hand were similar to the first group of industry stakeholders, because Lego System A/S already works with other types of standards, which made it natural for Lego to participate in the network. They wanted to influence the development of a global standard that would ease their cooperation with suppliers, and furthermore to make it easier for the company to audit and report on SR (JF:A121). NGOs There are four representatives in the NGO stakeholder group; Kim Christiansen & Christian Poll representing DN; Sarah Gregersen, R-92 Gruppen and Marie Busck, Danish Institute for Human Rights. Kim Christiansen is employed at DS and is a DN activist, and his motives are most importantly to make sure that the environment is taken into consideration in the standard. He has a lot of experience with standardization, which makes him an obvious candidate for the group of experts (KC:A44-45). Christian Poll, the second representative from DN, adds that his organization has been generally active within standardization, and since the 1990s it has been one of the organizations that have pushed for more environmental aspects into standards both regionally on European level and nationally in Denmark (CP:A102). Sarah Gregersen represents R-92 Gruppen, which is an umbrella organization representing around 20 organizations (KC:A45). R-92 Gruppen is an environment- and development organization and therefore it was obvious for the organization to participate in the DMC network, since some of its members already were engaged in other CSR networks (SG:A108). Danish Institute for Human Rights has worked with CSR for quite some time, and when they discovered the DMC network they decided to participate mainly to follow the development of the standard (MB:A125). All NGOs agree that they have chosen to participate because they want to learn about the standard and the development within the SR field, and furthermore they argue that they have specific knowledge, which they can add to the discussions in the DMC and the development of the ISO (KC:A44; CP:A102; SG:A108; MB:A125). Government The government stakeholders are Birgitte B. Nielsen, IFU and Mette H. Kristensen, Danish Commerce and Companies Agency. Birgitte B. Nielsen from IFU have been member of the DMC network since the beginning, and have attended the majority of meeting both nationally and internationally, whereas the latter organization has only been very active during the last year
39 (BBN:A61). Birgitte B. Nielsen has previously attended other standardization networks, and therefore she was an obvious candidate when IFU chose to participate in the DMC. She participates in the network because she has a lot of experience with and interest in standardization. Her job is to maintain IFU's CSR-policies and by being part of the ISO development process through the group of experts, she gains access to an international network, experience and knowledge about the international agenda on SR, which is valuable for executing her job (BBN:A64). The Danish Commerce and Companies Agency has slightly different motives and as their representative Mette H. Kristensen notes: E&S (Danish Commerce and Companies Agency) entered [the network] to keep us informed about the standard to begin with* (MHK:A67). The second motive for the agency is to attract attention to Denmark s promotion of CSR by becoming hosts of ISO s last WG meeting (MHK:A67) in combination with an international summit for sustainability in 2010 (E&S 2008a). Labor There is only one labor representative in this stakeholder group; CO-Industry represented by Arne Jensen, Dansk Metal. Dansk Metal has previously participated in networks developing management standards, and Arne Jensen has worked with environmental standards and occupational health and safety management, and therefore, Dansk Metal chose to participate in the development of an SR standard. Arne Jensen represents Dansk Metal on behalf of CO-Industry in the DMC, whereas all national labor organizations are represented by the International Labour Organization at negotiations at the international meetings (AJ:A50). Consumer The consumer stakeholder group has only one member, Danish Consumer Council, but they have had a high turnover of staff, and therefore their representation has not been stabile, and they have not participated in interviews conducted for this thesis. The previous consumer member of the DMC, Grit Munch, who recently left her job at the Danish Consumer Council and therefore is no longer member of the DMC, stated in the information brochure from DS about ISO 26000: As a private consumer it is [ ] impossible to see through the production conditions behind the many thousands of products we are introduced to unless we receive help from different tools. A standard would be an important part of the development of such tools. Therefore, The Danish Consumer Council has actively joined the [net]work in order to influence the coming standard to make sure that also the consumers interests are looked after in the standard* (DS 2006:8). According to this
40 statement, the consumer stakeholder group has two important motives for participating in the network. First of all, they wish to influence the development of the standard to ensure that consumer interests are managed in the standard, and thereby make sure that consumer interests and other stakeholder groups interests are equally important within the scope of ISO Secondly, the Danish Consumer Council wishes to help develop a tool that helps to create a more transparent shopping situation for the consumer by creating a standard that provides a label that consumers can trust, which makes it possible for them to see through it and become assured that ethical considerations have been made and that the products marked with this label have been produced under decent production conditions. Therefore, the consumer stakeholder s motives are based upon the wish for a trustworthy standard for consumers worldwide. 11 Service, Support, Research and Others (SSRO) There are two representatives from the stakeholder group representing SSRO; Trine Erdal (TE) from FORCE Technology who entered the DMC in 2005 and Kirsten Schmidt (KS) from AAU who has been a member of the DMC since the beginning. Trine Erdal notes that FORCE Technology chose to participate in the network because SR is of high interest to the company and therefore they are willing to invest substantial resources in gaining access to the network and influence the development of the standard (TE:A78). According to Trine Erdal there are two interesting approaches for FORCE Technology: One is the management system approach despite the fact that ISO is not a management standard. FORCE Technology is already engaged in other management system standards including quality, environment, occupational health and safety etc. Therefore it was obvious to follow the development of this standard. The other approach is sustainability, which is interesting from a thematic angle, which has got to do with the specific topics that are included in the standard* (TE:A78). Kirsten Schmidt, AAU, who originally started as a representative for FORCE Technology, seconds the motives described by Trine Erdal above. She adds that FORCE Technology is a consultancy, which aims at selling services within this area, and therefore they expected to gain knowledge and influence that would be beneficial for the company in future (KS:A35). She adds that AAU would not have attended the network if she wasn t already member when she shifted job, but she convinced the university that it would be beneficial for an educational institution to gain knowledge about the standard, because SR is a 11 It must be noted that this section is not based on an interview, and therefore one could imagine that there would be other motives for the Danish Consumer Council or maybe personal motives for its representative for attending the network
41 research field, which has experienced growth the last decades. The university is a knowledge institution which aims at gathering knowledge and distribute it to the students and therefore, Kirsten Schmidt hopes that being part of this network would lead to more education, work shops and research alliances (KS:A39). The motives of the SSRO representatives vary, mostly because this group represents the rest who may have very different motives for entering a standardization network. FORCE Technology participates because they, as a consultancy, expect to integrate this standard in their current portfolio of management system standards. AAU s motives are different; they would not have entered the network if Kirsten Schmidt was not already a member, however, she argues that the university as a knowledge institution can use her membership to broaden their educational field on CSR. SUMMARY OF PART I: THE MOTIVES Part I presented the motives of the different members of the DMC, and therefore the section has sought to answer the following research question: Which motives do the members have for participating in the DMC network and do these motives vary according to stakeholder group? The motives are very different not only across stakeholder groups but also between the individual organizations. The industry stakeholders have similar motives, which includes the desire to learn from other industry representatives and obtain information about the international SR agenda. A second motive is to influence and learn about the content of the standard to make sure that it can be integrated with the CSR strategies that the companies already have. The NGOs have different motives from the industry stakeholders because their primary motive is to make sure that their specific cause is maintained in the standard. The government stakeholders motives are similar to the industry stakeholders motives because they want to learn about the international agenda and get informed about the development of the standard. Furthermore, Birgitte B. Nielsen, IFU, wants to establish an international network, whereas the Danish Commerce and Companies Agency wants to attract the next ISO meeting to Denmark. The labor stakeholder wants to be part of the process because it was an obvious choice, because Arne Jensen has much experience with standardization. The consumers want a global trustworthy tool and a common language and thereby make sure that the consumers interests are looked after in the standard. The motives of the SSRO representatives
42 differ not only from the motives of the other stakeholder groups but also within the SSRO group, because FORCE Technology wants to make the standard fit into their business unit, whereas AAU wants to use the knowledge gained from the network to extend their educational field. Concluding; Part I presented the various motives and has shown that they vary across stakeholder groups. The findings show a high level of differentiation of the motives, which makes consensus more challenging to reach. PART II: THE NETWORK STRUCTURE AND PROCESSES The second part of the analysis investigates the processes that take place within the DMC network and to evaluate the parameters that are critical for consensus building. The first section of Part II provides an illustration of the network, which leads to an identification of the density and centrality of the network. These two concepts explain the network structure, which is the basis for further analysis of the processes and the evaluation of level of consensus according to eight critical success factors identified by Kickert & Koppenjan (1997). This is done to evaluate how these ten factors are accommodated within the complex network. Therefore, Part II of the analysis provides input to answer the problem statement by answering the following research question: How is the DMC network structured and how are the parameters of consensus accommodated in the complex network? NETWORK STRUCTURE The following section identifies the network structure, and for that purpose Rowley s (1997) terms Density and Centrality are used to provide an overview of the structure, and furthermore, creates a base for further analysis of the processes that take place within the network. Figure 6.3 shows the complex network, and as illustrated there are many ties between the various members:
43 Figure The Complex DMC Network Inspired by Rowley (1997) Figure 6.2 shows an illustration of the complex network of the DMC members. The figure shows that the chairman, Anne G. Larsen (illustrated as the large blue circle), has ties to all other members of the network, furthermore, the experts (shown as the medium-sized circle with different colors according to their stakeholder group) have ties to all other experts and that they have ties to ordinary members from the stakeholder group they represent. In addition, there are ties between all members from a particular stakeholder group, and furthermore, some members have ties to each other because they are involved in other networks or forums, and therefore have ties across stakeholder groups. Density Network density defines the interconnectedness of relational networks and an organization s degree of resistance to pressures from the surroundings (Oliver 1991). Network density is used in SNA and in stakeholder theory to describe the structure of the network. As network density increases, communication across the network becomes more efficient, as more ties facilitate information exchange between members of the network. In more sparsely connected networks members may
44 become isolated, and therefore information flows become more unstructured and inefficient. Furthermore, Galaskiewicz & Wasserman (1994) argue that when the ties in a network are extensive, actors form similar patterns of behavior, and therefore, when networks become denser, behavior becomes more similar across networks. Calculating network density using Rowley s (1997) formula, this particular network equals a density of , which is neither considered high nor low. As illustrated in Figure 6.2 above the experts has close ties to each other, and furthermore they have ties to other members from their stakeholder category. In addition the figure shows that the industry has ties to each other, as noted by Kim Christiansen as a fraction, coordinating agendas (KC:A49). The NGOs experience a similar situation, since they to some extent also coordinate their agendas. (SG:A110; CP:A105; KC:A49). There are 86 ties; and especially the close ties between the experts, and the coordination between stakeholder groups result in the large amount of ties. Since the network is very complex, but consists of organizations from within the same national context, it seems reasonable to believe that the density is considered to be higher than actually reported due to the fact that many members attend other networks as well (KC:A45; CF:A77). Therefore, it can be concluded that the density in this network is considered high using Rowley s terminology. This implies that the members of the network has a high ratio of ties between them, which creates more efficient information flows across the network, and also enhances the formation of coalitions in the network, which strengthens the homogeneity of the network, and also makes unified members with similar behavioral patterns (Rowley 1997). Centrality Whereas density characterizes the network as a whole, centrality describes the individual member s position relative to the others. Centrality measures the central member s direct ties to other actors, the independent access to others, and control over other members. As Figure 6.4 above illustrates, the chairman of the DMC is tied to all the other members in the network, and therefore, her position is considered central, which in Rowley s terms result in a high centrality. Thereby the centrality of the chairman s position in the network is illustrated in Figure 6.2, which is also supported by most of the other members of the network during the interviews. The chairman, Anne G. Larsen from Novo Nordisk A/S is the central actor within the network (KC:A54). In cooperation with Maibritt Agger from DS she sets the agenda for the network and controls the meetings (MAII:A13). She maintains the position as chairman, who tries to set the necessary agendas* (VD:A71) and control 12 Density is calculated as the number of possible ties within the network divided by the number of actual ties (Rowley 1997). For this network the density is calculated as 86/171=0.503
45 the structure of the meetings (JF:A121). Commenting on the chairman, Annemarie Meisling adds that she is very good at managing the process even though it is very difficult, and in that way she makes sure that we cover all the subjects we have planned and at the same time she makes sure that people feel that they have been heard* (AM:A96). Therefore, the chairman is in a central position and is linked to all other members, which indicate that the centrality of the DMC network is high. The combination of high density and high centrality of the network result in a structure, where the members have shared expectations and where information exchange between the members is easy. However, due to the high centrality the information that is exchanged is controlled by the chairman and the secretary because they are the direct links to ISO, and therefore they control the information flow. In a highly dense network stakeholders are able to constrain the central actor, whereas in a network with high centrality the central actor has control over other actors and are able to resist stakeholder pressure. NETWORK PROCESSES The network processes are analyzed through eight critical success factors, which provide a framework for analysis. The processes that take place within the network are very complex, and therefore it is necessary to analyze these within a framework to obtain an overview of the processes, which is why this particular framework is chosen. The following sections will guide the readers through eight factors that are critical for consensus building and thereby analyze the processes that take place within the DMC to evaluate consensus building in the network. The Number of Actors A common understanding is that the more members a network has, the more difficult it becomes to reach agreement. This is, however, also a common misunderstanding since the number of actors is not the crucial factor which promotes cooperation within networks. Of course, network management is not a case of the more the merrier, but rather of finding an adequate number of actors (Kickert & Koppenjan 1997). The DMC network consists of the secretary from DS, Maibritt Agger plus 18 members, of which 17 have agreed to participate in the case study. At the DMC meetings it is, however, of great variation how many members actually show, but at most meetings participation is around 15 people, which is acceptable according to Maibritt Agger (MAII:A14) and makes it possible for every member to contribute to the plenary discussions. Therefore, 15 members from different stakeholder groups may be sufficient when receiving mixed inputs and different comments from the various stakeholders, which is very important to ensure a multi-stakeholder
46 process. Therefore, it is important that all stakeholder groups are represented at the meetings, nationally and internationally (MAII:A14; VD:A70; MHK:A67; CF:A74; AM:A95; CP:A102; MB:A125). There is a common notion from all members that the network could be of broader representation, but as Claus Frier, Novozymes A/S notes I would argue that it is the right organizations [ ] There are both green organizations and development organizations, industry-organizations and single organizations, one could almost not demand the network to be broader represented* (CF:A74). However, most members note that the network is not optimal; in the current situation, the consumers have lacked representation for a while, which has also affected the outcome of this thesis, since they have not agreed to participate in an interview. Due to a high turnover of staff the consumer representative has not attended the last few network meetings, and did not take part in the international meeting in Chile in September 2008 (MAI:A14). This situation has restricted an optimal network, since one of the main goals is to include all stakeholder groups (ISO 2004). Some members note that the network does not include as many members as could be wished for, but the fact that all stakeholder groups at some point have been represented must be considered a serious step towards full representation (KS:A34). However, as Kirsten Schmidt, AAU, notes some of the stakeholder groups are represented by larger number than others, and especially the industry group has strong representation compared to the other stakeholder groups (KS:A34; JF:A121). Most of the members note that the number of actors within the network is not adequate, and that there will always be room for more members. Maibritt Agger, DS, responds that there is a lack of SMEs in the network, which would create another forum for discussion since SMEs have another focus than the global companies, which already have strong CSR-profiles and know what goes on in the field (MAII:A12; CH:A91; KC:A45, TE:A78). The network started off on a broad basis, but there is no doubt that when it came to the point where members had to pay to participate in the network, a lot of the interested organizations abandoned the initiative (AGL:A18). Furthermore, many of the industry-stakeholders meant that they were already represented by DI, and therefore many, especially industry stakeholders, decided not to participate after all (AGL:A18). Other members note that the network is getting closer to reaching the optimal representation, because it is much broader, than it was in the beginning. It is, however, peculiar that it is the usual crowd. It is the same organizations that always take part in networks such as this (BBN:A60). Others note that there is a lack of NGO representation (JC:A84; SG:A108), even though R-92 Gruppen is an umbrella organization representing 20 NGOs. However, Kim Christiansen, DS and DN, expected to see more
47 international NGOs such as Amnesty International, Friends of the Earth and WWF to be a part of the ISO process, and represent their national organizations in the mirror committees (KC:A45). Arne Jensen, Dansk Metal adds to this perspective: Ideally, the group is not optimal; it should be considerably larger than it is. We especially miss representation from the NGO perspective, as I gladly saw turned out in larger numbers, because there are some NGO points of view that are not put forward because they are represented by the DN and one single human rights organization* (AJ:A50). He also states that he is disappointed by the representation of industry stakeholders since it is only a few companies from the production-sector and none from the service sector. Furthermore, Kim Christiansen argues that some of the industry-locomotives, like Novo Nordisk A/S and Coloplast A/S are represented, but the network could have been broader seen from the industry-perspective (KC:A45). Other organizations are only registered as members, but have never attended meetings (MAII:A12). Furthermore, PriceWaterhouseCoopers and Rambøll Management participated in another Danish CSR initiative; Overskud med Omtanke, but have decided not to participate in the DMC, which may seem a little strange (KC:A45). The main problem is the level of resources membership requires, this does not only include the yearly fee of DKK, but also the amount of working hours required to keep track of the development of the standard. Arne Jensen from Dansk Metal concludes You cannot force people to attend a committee, especially if they are expected to pay for the membership* (AJ:A50). Even though many members argue that the network is not sufficient neither in number nor commitment, then many respondents argue that the group is broader than in many other countries (VD:A70; MB:A125; CP:A102). Birgitte B. Nielsen, IFU, adds that in comparison with other countries Denmark s stakeholders are relatively well represented, but with regards to Danish traditions for involvement of all interested parties, the DMC is under-represented (BBN:A61). All stakeholder groups are represented, however, many members express their concerns for the broadness of the groups, which show that the process has not been sufficient in attracting members and therefore the network has suffered from missing representation, which influence the processes in the network. Birgitte B. Nielsen, IFU, adds that it is difficult to engage people in the process; they usually wait for the result and a chance to criticize it rather than taking part from the beginning, and thereby making sure that their viewpoints are represented (BBN:A60). Furthermore, she notes that the Danish government, represented by the Danish Commerce and Companies Agency has been
48 surprisingly invisible in the process, and only recently have they shown interest in the network and the ISO standard. Recently the Danish government has included the standard in their CSR Plan of Action, which was introduced in May 2008 (E&S 2008a). The Danish government has undergone a three-year development phase, in which their representatives have changed their attitude towards CSR, and have discovered that CSR is not just a subject for companies to take care of, but also an opportunity for the governments to play a role. Now that also the government has chosen to take active part in the network, the DMC is fairly well represented, especially compared to Mirror Committees in other countries. However, if one should consider the Danish tradition for involvement of all parties, then the DMC is not well represented (BBN:A60). To sum up, according to the members of the DMC the network does not have its ideal structure and composition. First of all, the network should be broader by including more stakeholders from each of the six groups, and especially the groups with only one representative. Secondly, the network should include more NGOs, both nationally and internationally, and there is also a lack of SMEs that are currently only represented by DI, which also represent larger companies. However, most members agree that the network has developed in a positive direction, since it has become broader than it was in earlier phases and also because the level of engagement from the government stakeholder group has increased substantially. However, the number of actors in the network cannot be considered optimal; but it has been improved, which may result in a higher degree of consensus in the network. Diversity within Networks The complexity of networks finds expression in the multiformity of the members, therefore consensus depends on the extent to which efforts to influence networks take account of the diversity of the network and the members within (Kickert & Koppenjan 1997). As previously described the members are divided into four groups according to their commitment to the network (see section 6.1). This division represents diversity to a lesser degree, because some members have achieved a special role, and thereby hold specific knowledge about ISO that other members do not have. Therefore, it becomes evident that there is a certain level of diversity among the members of the DMC, since the experts have more knowledge about the details of the standard and has developed a tighter relationship (AJ:A51; JF:A121; LL:A115). Furthermore, Lars Ludvigsen adds that the members are not equal, because the chairman is very skillful and dominant, and seems a little more competent than the rest of the network (LL:A115). According to members that are not part of the
49 group of experts, this diversity does not cause problems, and in fact they argue that all members are valued equally even though they do not participate internationally, and they assume that the experts value the fact that they have a supportive base (CF:A75). Contrarily, there are some very competent members from the industry group that are not nominated experts, but handle SR issues in their everyday life at work, which is why they have specific knowledge in regards to this (KS:A36; KC:A46). There are some organizations that represent specific interests like human rights or the environment. Of course, they have specific knowledge in these areas, yet others have specific knowledge about developing standards, and yet some have company-specific SR knowledge. The individual organizations speak from specific positions, and therefore certain issues have different value for the different members (CH:A89). At the meetings, the industry representatives are very active, but their goals are slightly different, since some represent front-runner companies, who already are highly engaged in SR and pressure for a strong standard, whereas DI is more withdrawn in their ambitions (KC:A46). The division is evident, though, which implies that there is certain diversity, especially between the experts and the rest of the members. The first have more specific knowledge about processes, context and content of the standard (AM:A96; VD:A70; KS:A36; KC:A46). There is also diversity within the network since most members know each other in various ways (see Figure 6.2) and the members also engage in other networks that give them specific knowledge and competencies that other members do not have access to (CF:A78; KC:A46). According to Birgitte B. Nielsen, IFU, Denmark has a tradition for decision making based on consensus in many circumstances (BBN:A63). The members of the network are used to work within this context. Therefore, they listen to each other, and negotiate on how all groups can achieve what they want simultaneously and thereby make sure that all members are satisfied with the solution, or at least consider it acceptable for all parties (KS:A36). In addition to this, Denmark is a welfare state, and therefore, many of the SR issues are already integrated into Danish society, which is why ISO does not inflict with any Danish laws or regulations compared to other countries, where SR issues are not integrated in national laws (BBN:A63). The fact that Danish society is based upon consensus means that imbalances between members occur, but relative to other mirror committees the members of the DMC appears united and equal; the members are valued mainly according to what they say and to a lesser degree according to their title or position within the network (AM:A96; CP:A104; SG:A108; MHK:A67; KC:A46; MAII:A14; TE:A79). This implies that the members in the network are equal and that the tone they use among themselves is very informal. Thus, the DMC appears as one unit, and not as separate individual stakeholder
50 groups (BBN:A61), and therefore the diversity of the network does not cause trouble for the network to reach agreement, which is why it can be concluded that the network has efficiently managed the diversity within, which creates a sound level for discussion among the diverse members of the DMC. Closed Nature of Networks Closedness represents an important issue regarding the success of a network. The concept of closedness refers to the way networks process the inputs provided by the surrounding environment. While coping with disturbances from the surrounding environment closed networks refer only to themselves, and in such situations network management opportunities are limited (Kickert & Koppenjan, 1997). The DMC network is not characterized by closedness, the members attain their information and inputs from various sources, since they come from very different situations and positions in companies, NGOs, governmental institutions, labor organizations or educational institutions and consultancies. Meetings are scheduled 3-5 times a year and the members participate on different levels of engagement (DS 2006), which means that the members only see each other randomly, which decreases closedness of the network. However, many members argue that since the network has existed for more than three years, the members, and especially the experts know each other well (KS:A36; AJ:A51), a fact that increases the closedness of the network. Contrarily, the ordinary members, who do not participate internationally, state that they receive their inputs from other networks and sources (CF:A78; AM:A97; TE:A81). There are several initiatives in a Danish context that require attention from the members of the network. The Danish Ministry of Economic and Business Affairs has established the initiative CSR Kompasset in cooperation with DI and the Danish Institute for Human Rights (DS 2006), and The Danish Commerce and Companies Agency have initiated Overskud med Omtanke 13, a project in which both IFU, DS and Novo Nordisk A/S took part, which have given them a network and competencies that the rest of the DMC members do not posses (KC:A46). Furthermore, another initiative concerning CSR and corruption has been established, which includes some of the members of the DMC (DS 2006). In addition, the Danish Institute for Human Rights has established a project called Human Rights & Business as a close cooperation with DI and IFU (DS 2006:14). These different initiatives and networks imply that the members of the DMC receive inputs from various sources, and therefore the network cannot be characterized by closedness. 13 Overskud med Omtanke was terminated December 2007 (E&S 2008b), however the participants have benefitted from the network, and inputs are not terminated even though the project is no longer operating.
51 On the other hand, the network is initiated by Maibritt Agger at DS, who has asked Anne G. Larsen, Novo Nordisk A/S to chair the network, which means that management of the network is shared between the two organizations (KC:A45). However, Maibritt Agger, DS, states that she, besides being the initiator, takes care of the practical tasks (MAII:A12), whereas the chairman runs the meetings (KC:A45; LL:A115). According to most members, the network is organized well and the members seem very engaged in the network (MHK:A68). The process have been long and very text-intensive, which may seem difficult to manage, but the impression of the members is that the network has been run well (TE:A79; CH:A90; JC:A85; CP:A104-5; MB:A126). This structure enables the network to cope with disturbances from the surrounding because the members receive their inputs from various sources and bring them into the network. Villy Dyhr, however, states that the network is very loosely linked, there are many issues to discuss, and the chairman tries to set agendas and manage the network (VD:A71). To sum up, even if there are some differences between the perceptions of the different members, the network is not considered closed, but rather open to inputs and capable of coping with disturbances from the surrounding environment. Conflict of Interests The absence of sharp conflict of interests is considered a precondition for the success of a network. In situations where interests clash, reaching consensus may seem impossible. Therefore, the scope for finding a joint solution is far greater than may be inferred from the reference to conflict of interest, because interests are not an objective fact but are defined by the members in the course of interaction processes (Kickert & Koppenjan 1997). The author expected that a network consisting of very different stakeholders with very different positions to SR would result in a high degree of conflict of interests. However, the case study has shown that this is not the case for the DMC network. The members of the network have responded that they have not experienced many conflicts between the different members. Few have experienced fractions, and even the expected traditional conflicts between labor organizations and industry, or large, global companies and SMEs, or industry and NGOs, have not occurred in this network. Certification is one of the issues that the DMC has agreed to work for internationally (CP:A107), however, the Danish delegation have not succeeded achieving this task since the standard is not created for certification, but is only a guidance document in its current version. There is certain concern among the SMEs that if the standard becomes more than a guidance document and becomes an actual standard ready for implementation and certification, then it will also become a
52 requirement that they follow the guidelines of the standard, which will be costly for SMEs that have not wholly developed CSR strategies compared to the global companies (AGL:A25). Contrarily, the large global companies in the network agree that they want at standard, which will give them a certificate. Since no one knows the final version of the standard, the companies are reluctant to proclaim whether or not they plan to implement the full standard or only parts of it. However, they all agree that they will definitely look at the standard, and use it, if is seems appropriate to align it with their already established CSR-strategies (JF:A123; AGL:A30; CH:A93). The members of the DMC argue that the conflicts of interests have decreased after it became evident that the standard was only going to be a guidance document and not a standard for certification. The traditional conflicts between NGOs and industry concerning the environment and environmental management are not an issue for the DMC network (AGL:A26). Most of the companies in the industry stakeholder group are already certified according to environmental management systems like ISO 14000, and are considered front-runner companies in this area as well as in CSR, and therefore the NGOs and companies do not experience differences in opinion concerning these issues (VD:A70; CH:A88; AGL:A32). Of course, there is a difference in the radicalism of the effort put into environmental management, and of course the DN and R-92 Gruppen would like the companies to do even more for the environment, and the Danish Institute for Human Rights would like the companies to do more for workers rights, child labor or general human rights. These are not issues in Denmark, because of the welfare state and the strong regulations, and therefore these conflicts of interests are not subject for heavy debate, since the organizations agree on the topics in general (BBN:A47; CH:A91). It is, however, issues that Danish companies must consider when engaging with other companies worldwide; and especially when engaging with suppliers in developing countries. The lack of conflicts of interests will be covered more thoroughly in the discussion of this thesis (chapter 7), but this section will briefly cover the agenda setting. During the interviews the members of the DMC were asked whether each organization has its own agenda or the network has a joint agenda. The answer was clear, first of all the network through interaction has developed a joint agenda, which the experts bring to the international meetings. Contrary to most other mirror committees the DMC send jointly designed comments on the working drafts to the WG (AGL:A29; KS:A39; AJ:A55; TE:A81). Secondly, some members note that they, of course, have their own agendas as well (MHK:A69; VD:A72; JC:A86; CP:A105), but the main goal is shared among all members; to take part in the development of the best possible standard that includes all relevant
53 issues and is viable and useful, when organizations seek to integrate it into their existing management systems (KC:A49; MAI:A10). To sum up, one of the preconditions for consensus is met since very little conflicts of interests have been identified in the DMC network. Costs of Network Management There are costs involved in network management, and the higher these costs, the fewer members will be inclined to take the role upon themselves. Therefore, the success of a network depends partly on the way in which the costs are implemented (Kickert & Koppenjan 1997). The DMC secretary, Maibritt Agger notes that at the first information meeting 150 interested organizations participated, but as soon as membership fees were introduced most of these organization were not as interested as before (MAI:A9). Therefore, the DMC currently only consist of 18 members, but only the industry, government, labor, and SSRO stakeholders pay membership fees, whereas the consumers and NGOs fees are covered by DS (MAI:A8). The chairman s company Novo Nordisk A/S has also agreed to make donations to the ISO Trust Fund (AGL:A21), which is established to support experts and observers from developing countries, to ensure that all stakeholders are represented at the international meetings (MAI:A10). The cost of membership is therefore even higher for the chairman s company, but since they have agreed to chair the network, they have considered these costs appropriate (AGL:A20). The financial costs of participation appear as an important factor and according to some members, these costs are very relevant to discuss (BBN:A61; AJ:A50). It seems inappropriate that organizations should pay to participate with their specific knowledge and help develop a standard, that ISO at some future point in time may use for certification and thereby use it as a source of income (AJ:A50; BBN:A61). However, the organizations in the DMC have considered the costs of participation and have found it acceptable compared to the output they expect to gain from participation. There are other costs involved with the membership other than financial, because many members note that they spend many working hours preparing and attending meetings (AGL:A24; KS:A38; KC:A48; BBN:A63). Especially, the experts invest heavily in the membership. For some experts their costs are not covered by their organizations. They have to seek funds elsewhere if they want to participate internationally, and one of experts notes that he had to use a week of vacation at one of the international meetings (KS:A38). The ordinary members, who do not take part internationally, also respond that they invest a lot of resources in the network, and that it is important for them to be at the meetings, and be prepared even though it involves a lot of working hours to read through the
54 massive load of documents (AGL:A24; KS:A38; TE:A80). The number of actors have decreased since the first information meeting, however, the members in the network today, are therefore more engaged (some more than others) and have considered the benefits larger than the costs of the resources they have invested in the membership. To the question: Has it been valuable for your organization to participate in the network? all members have responded positively, and thus the conclusion must be that they have evaluated the network and found the financial and human resource investment appropriate compared to the output, they have received from being members of the DMC (Appendix 8-24). Concluding, the implementation of the costs of participating in the DMC network most be considered sufficient, and therefore this critical factor is sufficiently met when considering consensus building in the network. Political and Social Context The role of the political and social environment of networks has been stressed as an important and critical factor to the success of the network. These two factors may underpin the course of the interaction processes within the network, but they may also serve as disturbing factors. It is essential for the success of networks that it reflects the network environment and confronts the members with perceptions from the outside world (Kickert & Koppenjan 1997). This factor is linked to another critical success factor of network management, namely the diversity of the network (see section ), in which the Danish context was discussed. The democratic tradition and search for consensus were mentioned as one of the conditions for the lack of direct conflicts of interests. Furthermore, ISO s international context and the international meetings, which some of the experts attend, are also a factor the DMC is highly dependent on, since the international agenda sets the framework for the discussions in the national network. There are many conflicts at the international meetings, mostly between the stakeholder groups and between countries dependent on the size of the country, the cultural background, development stage etc. (MAI:A10; KS:A43; AJ:A56), but these conflicts have not been reflected in the Danish network. The international conflicts of interests have resulted in a weaker standard, e.g. since the experts and observers have not reached an understanding about creating management standard, but only a guidance document on SR (KS:A42). However, many of the Danish members state that they expect other certification bureaus to use the standard for certification (MAI:A9) and Maibritt Agger notes that DS will develop a Danish version of the standard implemented with the management system of ISO and other relevant standards (KC:A49; MAI:A9), which means that they will be able to use the Danish version of the standard for certification. Other members of the DMC note that they expect
55 ISO to develop a standard for certification after this guidance document has proven itself effective and useful (AJ:A58; BBN:A66; CH:A93). In that case, the process will be prolonged and it will take ISO at least three years to develop a standard that can be used for certification (CH:A93). Anne G. Larsen, Novo Nordisk A/S, adds that ISO has done itself a bad turn not to develop a standard for certification, because there are consultancies etc. that are willing to certify after ISO and make a living out of doing so (AGL:A23). However, she argues that it was necessary to reduce the DMC s ambitions to get the standard through the process, and develop a useable document. Therefore, the political and social context have had a highly degree of influence on the development of the standard, and certain interests asking for a guidance document in stead of a real standard have been successful in their lobbyism. The Danish delegation and the DMC have not been successful in pushing their agenda for a standard for certification-use through the international system, and therefore this critical factor has not increased consensus in the network, because the social and political context internationally was working against the goal of the Danish network. Even though there has been a joint agenda within the Danish context, this has not created a spill over effect on the international agenda. However, the Danish experts imply that they have had some degree of influence on the development of the standard (KS:A41; AGL:A30). Kim Christiansen and Birgitte B. Nielsen have fought two battles; the first is to clearly state that this standard is not for companies only, but is useful for all organizations, government agencies, NGOs, consumer agencies or educational institutions. In fact all organizations can use ISO as a guidance for their behavior (BBN:A66). The second battle is to create a reasonable 'how' chapter in the standard, specifying which actions organization should be taking to ensure that the SR principles are implemented and maintained throughout the organization and its supply chain and that SR issues are dealt with in an appropriate manner (BBN:A65).These are concrete sections of the standard where Danish fingerprints have been set. On the other hand, some experts argue that the standard is a product of a long and intense process where many different stakeholders have had a saying in what the final wording should be. Therefore, it is impossible to state that the specific wording is a direct effect of the Danish agenda (KS:A41; AGL:A30). However, most members of both the group of experts and the general network argue that the Danish agenda to some extent has been successful internationally, but the most important issue - certification has not been possible for the Danish experts to get through. Therefore, there has not been coherence between the international and the Danish agenda, and thus,
56 the political and social context of the network has hampered the Danish agenda. The surrounding context has not proven itself positive for consensus building in the DMC network. Leadership and Commitment Power The result of network management is determined by the capacity of the members to demonstrate leadership in interactions and succeeding in getting their organization to keep to the agreed procedures. Therefore, the success of a network depends on the quality of the leadership and the commitment power possessed by the representatives of the involved organizations (Kickert & Koppenjan 1997). The leadership of the DMC network is evaluated by most members as being of high quality (LL:A114; AM:A96), and the precondition for consensus is present in the DMC network. In addition, Lars Ludvigsen, PR Partner adds that there is a very skillful and dominant chairman in the Danish group, and it is my view that she seems a bit more competent than the others* (LL:A114). However, the commitment of the involved organizations differ very much, especially between the experts and the ordinary members, who in general invest less resources, both financially and in terms of working hours, than the experts (KS:A37; KC:A46; AJ:A54). Furthermore, many members express that they experience the other members as competent, even though they posses different positions and represent different stakeholder groups (LL:A114; KS:A36). The members are considered very engaged, skillful and well informed. Furthermore, the members posses a great amount of knowledge concerning SR and represent different angles; industry representatives have their everyday knowledge of how their company works with CSR, NGOs have their agendas concerning how they want companies and other organization to work with CSR, including environment and human rights, labor organizations have the notion of how workers right should be approached; Government have their agendas on how to regulate on SR issues; and the rest, the consultancies and the educational institutions have their notion of how they each want to promote SR in their fields. All stakeholder groups are engaged and show commitment, it is however, different to which extent they invest in their commitment (KS:A37). The difference in commitment between the members is touched briefly upon in an earlier section of this thesis, which is illustrated in Figure 6.2 showing how the network is divided into four groups. The first group is the experts, who attend all international and national meetings, the second is the rest of the experts, who attend most of the international and national meetings, third is the ordinary members, who attend all national meetings, and last, the fourth group of members, who occasionally attend national meetings. This
57 division illustrates how the commitment and engagement of the members differ. These different levels of engagement make it more difficult to manage the network, since not all members are willing to commit substantial resources into the network (CF:A75; MB:A126). Some members are willing to invest heavily in the network, such as the chairman s organization, and the other experts, who are not always paid to attend the meetings and have to spend their spare time preparing for both international and national meetings (KS:A34 & A38; BBN:A61). The commitment of the chairman is very important for the network, and the organization behind her have agreed to invest in the network not only by granting money for the ISO Trust Fund, but also by engaging heavily in both the international and the national network. Novo Nordisk A/S does not only invest financially, they also put substantial human capital into the network (AGL:A24), which has resulted in strong leadership, and a well organized network. This critical factor is therefore a precondition for consensus building in the DMC network. Skills The skills and qualities of the network manager constitute a crucial precondition for success and consensus building (Kickert & Koppenjan 1997). This critical factor is linked to the previous section. As mentioned earlier, most members of the DMC consider the network well organized, and many mention the chairman and the secretary as crucial factors for consensus building in the network. Furthermore, as previously mentioned the chairman is considered very skillful and the network is evaluated by most members as being well organized due to the chairman and the secretary. The experts has achieved a lot of specific knowledge, that other members do not have (KS:A37; KC:A46; AJ:A54; BBN:A63), and therefore they may seem more skillful concerning the development of the standard. This, however, does not mean that the rest of the members are less skillful, they just approach the making of the standard from a different perspective, and most, especially the industry stakeholders look for a viable standard, they can use and to some extent use and implement as a part of their CSR strategy (CH:A93; TE:A82; JC:A87, CF:A76; JF:A123). As mentioned in the previous section the members consider each other skillful, and there is no doubt who the dominant actors are, and whether or not the network is well organized. They consider the network manager very skillful, engaged and committed to the network (Appendix 8-24). All members, of course, aim for the best result, a viable standard, but a functional network is a necessity when seeking a joint solution, and therefore, since the members only provided positive answers concerning the network s chairman, it can be concluded that she, in cooperation with the
58 secretary, manage the network well in their quest for the optimal and joint solution for the DMC network. SUMMARY OF PART II: THE NETWORK STRUCTURE AND PROCESSES This section sums up on the second part of the analysis and answer the research question: How is the DMC network structured and how are the parameters for consensus accommodated in the complex network? It can be concluded that first of all, using Rowley s (1997) terms the network is characterized by having a combination of high density and high centrality. This implies that the network has an efficient communication structure between members and produces shared behavioral expectations. Further, the chairman is in a central position and is capable of influencing information flows. Thus, the members and the chairman are able to impact each other, and thereby create a joint solution. This implies that the goal is to negotiate a mutually satisfactory position, which at least minimally appeases the expectations of the members, and achieves a predictable environment in which the network s other members unlikely oppose the chairman s actions collectively. The chairman organizes the network and make sure that there is a common goal, and aims at reaching a joint solution. The network has reached this common goal, and has established a Danish position to the standard (KS:A39). One might add that the reported success only concerns the joint Danish solution, since it has not been possible for the experts to fulfill all criteria in the Danish Position Paper (KS:A39) internationally, and thereby not all Danish requirements are met in the latest version of ISO Furthermore, consensus building in the network is evaluated through the eight critical success factors as defined by Kickert & Koppenjan (1997). The Figure below illustrates how the parameters have had a positive or negative effect on consensus building in the DMC network.
59 Figure Preconditions for Consensus To conclude on the findings shown in the figure above, there has been a prevailing positive effect, since the preconditions for consensus has been met in eight of the ten factors. This does not mean that the optimal network has been reached concerning structure, processes and outcome, however, the network has been partly successful in the consensus building exercise to reach a joint solution and a positive outcome of the membership. PART III: THE OUTPUT The last part of the analysis is an evaluation of the expected and realized output of the membership of the DMC network. This section therefore explores the output as the members experience it at the end of the process after being part of the network during the development of the standard. The output of the network has been evaluated by the members in the last section of the interview, where they have been asked whether or not the membership has met their expectations. Furthermore, they
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